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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Thermo Fisher Scientific Inc was -0.55. The lowest was -3.03. And the median was -2.45.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Thermo Fisher Scientific Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.8735||+||0.528 * 0.9152||+||0.404 * 0.979||+||0.892 * 1.1323||+||0.115 * 0.8269|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0048||+||4.679 * -0.0123||-||0.327 * 0.9491|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $2,631 Mil.|
Revenue was 4270.9 + 3918.8 + 4492.8 + 4171.4 = $16,854 Mil.
Gross Profit was 1941.8 + 1822.5 + 2091.9 + 1933.6 = $7,790 Mil.
Total Current Assets was $6,237 Mil.
Total Assets was $41,774 Mil.
Property, Plant and Equipment(Net PPE) was $2,407 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,720 Mil.
Selling, General & Admin. Expense(SGA) was $4,754 Mil.
Total Current Liabilities was $6,100 Mil.
Long-Term Debt was $10,664 Mil.
Net Income was 511.6 + 385.1 + 601.2 + 471.6 = $1,970 Mil.
Non Operating Income was 3 + -3.9 + 4.9 + 5.2 = $9 Mil.
Cash Flow from Operations was 764.9 + 80 + 953.7 + 676 = $2,475 Mil.
|Accounts Receivable was $2,660 Mil.
Revenue was 4321.9 + 3903.5 + 3466.9 + 3191.8 = $14,884 Mil.
Gross Profit was 1846.5 + 1620 + 1481.7 + 1347.9 = $6,296 Mil.
Total Current Assets was $5,944 Mil.
Total Assets was $44,313 Mil.
Property, Plant and Equipment(Net PPE) was $2,472 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,300 Mil.
Selling, General & Admin. Expense(SGA) was $4,178 Mil.
Total Current Liabilities was $6,236 Mil.
Long-Term Debt was $12,502 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2631 / 16853.9)||/||(2660.1 / 14884.1)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1822.5 / 14884.1)||/||(1941.8 / 16853.9)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (6236.6 + 2406.9) / 41774.4)||/||(1 - (5944.4 + 2472) / 44313.4)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(1300.1 / (1300.1 + 2472))||/||(1720.4 / (1720.4 + 2406.9))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(4753.7 / 16853.9)||/||(4178 / 14884.1)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((10663.7 + 6100.4) / 41774.4)||/||((12502 + 6235.6) / 44313.4)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(1969.5 - 9.2||-||2474.6)||/||41774.4|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Thermo Fisher Scientific Inc has a M-score of -2.59 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Thermo Fisher Scientific Inc Annual Data
Thermo Fisher Scientific Inc Quarterly Data